Capgemini to buy Prosodie for €382m

Capgemini, Europe’s largest IT services company, continued its acquisition spree on Tuesday when it announced plans to buy Prosodie, a French internet and telecoms services company, for €382m ($552m) in cash.

Prosodie, which is owned by Apax Partners, provides software for businesses, including Carrefour and BNP Paribas, which allows them to handle large numbers of internet and telephone queries from customers.

Paul Hermelin, Capgemini’s chief executive, told the Financial Times that buying the specialist company was part of an attempt to reinvent Capgemini in the face of growing competition from the much larger Indian IT services companies, which are driving down prices.

“We are also growing headcount very rapidly and will be 120,000 by the end of the year. But how stable is the model of just adding more people? We also want to grow our ability to offer specialist solutions such as handling customer relations or smart energy,” Mr Hermelin said.

Prosodie has 861 staff, based mainly in France, with revenue of €172.3m and operating income of €26.3m last year. It was listed on the Paris stock exchange until 2007, when Apax took it over in a leveraged buy-out.

Mr Hermelin hopes to quickly double Prosodie’s revenues by expanding the business outside the French market. The deal is expected to add 3 per cent to earnings per share this year and 4 per cent next year.

Prosodie will be Capgemini’s fourth transaction this year, and is the largest deal it has done since the company bought a 55 per cent stake in CPM Braxis, the Brazilian IT services company for €233m last September. That deal gave Capgemini exposure to the rapidly growing Brazilian economy, a region where many IT companies have been rushing to make acquisitions. Earlier this year it also bought two small companies in France, Avantias and Artesys, as well as BI Consulting in the US.

Mr Hermelin said Capgemini was interested in further emerging markets deals and had missed out on a deal to buy a Chinese rival earlier this year. It is understood to be looking to add up to 8,000 new staff to its Indian operations.

The company, which had €1bn in cash reserves at the end of last year, is also looking for other specialist IT services companies to buy in Europe, although these deals are likely to be smaller, Mr Hermelin said.

Capgemini has seen a rapid recovery in IT services demand over the past year, with revenues up 14.5 per cent to €2.35bn in the first quarter of 2011. It has increased its headcount by 20 per cent to 112,127 employees in the past 12 months.

Shares in Capgemini rose 2.85 per cent to €38.49 in afternoon trade.

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